Afro-Asian trade rides on growth in India & China

NEW DELHI: High growth rates in China and India have resulted in growing demand for commodities, mainly oil, ores and timber, which has led to an increase in Asian-African trade.

A notable amount of these exports are to the two fastest-growing economies in Asia-China and India. Bilateral trade between China and Africa stands at $55.4 billion while that of India and Africa is relatively lower at $25 billion, according to Citigroup.

However, the patterns of trade are a bit different. While natural resource-extensive industries are the chief focus area of China-Africa trade, India's is a little more diversified and labour-intensive than China's.

China today is Africa's third largest trading partner. However, Indian interest has accelerated since 2000 with bilateral trade rising from $5.5 billion in fiscal 2002 to $25 billion currently. Similar to China, energy security has been a key reason behind growing investments in Africa. India sources 18% of its oil from Africa. Faced with a rising demand for oil, India is attempting to diversify its reliance on oil supplies away from Middle East (from where it obtains 74% of its energy imports) towards other sources, says Citigroup.

IOC has signed an MoU with Edo State in Nigeria to set up an oil refinery while ONGC Mittal Energy is establishing a refinery, power plant and railway lines in exchange for oil exploration rights. Recently, Reliance has acquired a majority stake in Gapco, which has a significant presence in East Africa in the petroleum downstream sector.